Group Decisions Under Ambiguity: Convergence to Neutrality
University of Vienna
INSEAD – Decision Sciences
David V. Budescu
Fordham University - Fordham College at Rose Hill
April 16, 2012
INSEAD Working Paper No. 2012/43/DS
This paper focuses on decisions under ambiguity. Participants in a laboratory experiment made decisions in three different settings: (a) individually, (b) individually after discussing the decisions with others, and (c) in groups of three. We show that groups are more likely to make ambiguity-neutral decisions than individuals, and that individuals make more ambiguity-neutral decisions after discussing the decisions with others. This shift towards higher ambiguity neutrality in groups and after a group discussion is associated with a reduction in the rates of both ambiguity aversion and ambiguity seeking. We attribute the results to the effective and persuasive communication that takes place in groups.
Number of Pages in PDF File: 38
Keywords: ambiguity, group decision making, imprecision, risk, vagueness
JEL Classification: C92, D71, D81
Date posted: April 16, 2012
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